Digital Identity

Why Digital Identity Needs A New Normal – Now

eCommerce, digital payments Boku

Although every business wants to “future-proof,” actually doing it is much, much harder. As the first quarter of 2020 has been kind enough to demonstrate on a global scale, the future is an unpredictable place. For all the predictions, models and plans that existed for the first part of this year, almost no one factored in a global pandemic that would disrupt the global economic system and potentially tip off a financial crisis in the space of just a few weeks.

In an uncertain world, some outcomes really are just the luck of the draw, Boku CEO Jon Prideaux told Karen Webster, noting there is an alternate universe where Boku went into the travel vertical instead of digital transactions at its founding several years ago. 

“I’ve thought a lot about how I could have taken a different approach and gone into the travel business — after all, everyone likes travel, and there are all kinds of reasons that would have been the more sensible path to be take,” he said. “But if I had done that, I’d be in a real mess right now.”

But for all the anxiety, loss and genuine change the coronavirus pandemic and global response have triggered, Prideaux said, it is important to bear in mind that COVID-19 hasn’t so much created new trendlines out of whole cloth, as it has accelerated those that were already in place at an exponential rate. Digitization in consumer behavior was already well underway, he noted — and the reality of consumers now being in their homes and turning to digital channels for commerce, entertainment and education to support their professional lives has driven already present factors into overdrive.  

The players that emerge on the other side most unscathed, said Prideaux, will be the ones that are able to smoothly handle the mass digital explosion, with seamless and secure digital interactions.

Pushing Outdated Thinking About Identity 

In a world where many more people are logging on en masse to play games, shop, stream and work, the ability to make sure everyone is who they say they are — and are doing things they are authorized to do — becomes critically important. 

Prideaux said he’d be exaggerating grossly if he said that his phone suddenly had started ringing off the hook in the last few weeks because people have suddenly seen the light on the changing face of consumer authentication. But what has happened in this stressful time is that older ways of providing and guaranteeing digital identity are being exposed for their ineffectiveness.

Regulations related to how identity is established and authenticated are complex and varied, but they always break down to a basic triumvirate of factors to provide: something the consumer knows, something the consumer is and something the consumer has. The trouble is that those things are not quite invulnerable, Prideaux noted. With the number of data breaches that have occurred, something a consumer knows — a password, their mother’s maiden name, the street where they lived — are all things a fraudster can get fairly easily.

“And in the age of mobile, there is no instant signifier of identity the way an email address was in the PC era, for example,” he said.

Phones, however, have a unique potential. They are hard to access, since most newer models require a biometric authenticator to open — and even when they don’t, consumers keep uniquely good track of them. A person who loses his physical wallet for the better part of a week without alarm is likely to experience heart palpitations within minutes if he loses his phone.

Moreover, said Prideaux, phones offer a unique opportunity to fill out the authentication pyramid in a way that is nearly instant on the back end, so the consumer’s digital journey isn’t unnecessarily interrupted or derailed. However, there is a caveat. The mobile number is only useful as a verification tool if it is the right phone. Often when people register new accounts, a lot of companies are not verifying that the phone number being registered actually belongs to the user, which can allow fraudsters to substitute their own number during this registration process — rendering all subsequent possession checks ineffective. 

The phone number itself must be verified as belonging to the user — data that telcos can uniquely provide with their customer account data. Equipped with that data set, said Prideaux, telcos will have the opportunity to insert themselves into the global digital commerce stream in a way that only they can.

Tapping The Right Data For The Right Experience 

Telcos have struggled for years to find the right points at which to interject themselves into the digitization of the global economy, outside of unique successes like Safaricom’s M-PESA. But phone companies have access to customer account data, along with the unique ability to verify that the customer using the phone to transact is in fact on the right phone.

That data, said Prideaux, is a natural symbiote for mobile wallets, mobile commerce operators and any entity that wants to enable a transaction.

And that data is spread over hundreds of mobile providers operating across many regulatory jurisdictions with different guidelines on information gathering, privacy and distribution — which means they need an aggregator to sync and distribute all of that data. That is the role Boku plays.

And given the shape of things so far in 2020 and the short-term predictions, it’s a role that will keep the company busy in the immediate future. Because while no one knows exactly how this situation will develop for consumers, businesses and the economy, it seems the acceleration of digitization won’t die down. If anything, it is likely to pick up. And consumers will flock to the experiences that are secure — and those that happen quickly, quietly and without speed bumps. 

Those that can’t provide that on both ends will likely become another casualty of COVID-19. 


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.